Federal Student Loan Borrowers Face Deadlines for New Repayment Plans

Deadline Approaches for Former SAVE Plan Borrowers

Many federal student loan borrowers who were part of the Saving on a Valuable Education (SAVE) repayment plan must decide on a new plan soon. Deadlines differ for borrowers; September 29 is the first, 90 days after notices were sent starting July 1. Borrowers contacted later have extended deadlines, as servicers follow varied schedules.

Following a federal court order, the SAVE plan ended. Unsure borrowers risk automatic transition to the Standard or new Tiered Standard Plan. These default choices may increase monthly payments because the transition lacks individual financial assessment.

Affected Borrowers and Deadline Details

The September deadline predominantly affects SAVE participants notified in early July. For others, the time span extends. MOHELA and Edfinancial are sending notices from July through October, allowing 90 days for each borrower to decide. Confirming specific deadline dates on servicers’ accounts is crucial.

Consequences of Inaction

If borrowers miss deadlines, a move to the Standard or Tiered Standard Plan is automatic based on loan specifics. The Standard Plan has fixed payments over 10 years; the Tiered Plan, new as of July 1, includes terms of 10 to 25 years set by owed amounts.

Available Repayment Options

The Standard Plan may appeal to those desiring consistent payments and a clear payoff timeline. Higher earners might save on interest by avoiding longer-term debt. A new option, the Repayment Assistance Plan (RAP), sets payments on income and dependents, allowing for more flexibility. Depending on circumstances, payments range from $10 monthly up to a portion of income, with plans lasting up to 30 years.

Income-Based Repayment (IBR) also remains viable, with payments as a percentage of discretionary income. Loan type and date affect eligibility. Remaining balances could be forgiven after decades in some cases.

Checking loan types and other pertinent details on the StudentAid.gov dashboard aids in decision-making and ensures borrowers know their current choices.